Election meltdown fears over cash for honours

The Scotland Yard inquiry into the cash-for-honours affair may not end until after the Scottish, Welsh and local elections in England on May 3, raising the prospect of damage to the Labour party.

Confirmation that the inquiry, which has been repeatedly extended since last summer, is still not near a conclusion came amid speculation about the likelihood of charges being brought against Lord Levy, Tony Blair's fundraiser, or No 10 staff.

One source told the Guardian yesterday that the investigation appeared to have some way to go.

Deputy Assistant Commissioner John Yates, the officer in charge, is said to have told friends that he has merely reached "Act Five, Scene One".

Last week the Guardian reported that detectives are investigating whether Lord Levy urged one of Mr Blair's most senior aides to shape the evidence she gave to Scotland Yard. Police have been investigating whether Ruth Turner, Mr Blair's director of external relations, was being asked by Lord Levy to modify information that might have been of interest to the inquiry. That disclosure suggested a scenario under consideration by police which cast Lord Levy as the driving force in seeking to frustrate the investigation.

But yesterday's Sunday Times aired a different theory. It said one key element of the police inquiry was whether Lord Levy asked the prime minister's most senior advisers to mislead police once the investigation was under way. But it said a written record of the discussion revealed that his suggestion was overruled by Ms Turner, who drew up what she believed was a more "credible" strategy.

The paper said she allegedly said they should claim Lord Levy was asked for "advice" and "character references" about potential peers. If true, this would place her in a difficult position because Lord Levy's input is thought by the police to have been far more significant.

The Sunday Times said Jonathan Powell, Mr Blair's chief of staff attended a meeting at which the "alleged cover-up" was discussed and would be re-interviewed shortly by the police. Lord Levy has been arrested on suspicion of conspiracy to pervert the course of justice and has vigorously denied any wrongdoing.

No 10 insiders called the weekend claims "all froth".

"It is now clear that this inquiry is going through the Scottish elections, " said one senior Labour MP. If the inquiry has not reached a denouement before the end of next month or early May Labour strategists fear a hammering in elections for the devolved parliaments in Cardiff and Edinburgh, plus 312 English local authorities, all on May 3. The police investigation was initiated by the Scottish National party's MP for the Western Isles, Angus McNeil, whose party made it a central issue in its drive for an independence referendum.

One MP said: "The whole SNP campaign is built on cash for honours. They don't seem interested in health or education or any of the other issues that should dominate the election. They are taking the glory from having started it all and the longer it goes on, the worse that gets."

Mr Yates and his team remain convinced that the inquiry will be vindicated both in terms of its integrity and the length of time it has taken. Lord Levy is also said to be bullish about his future, "confident ... he will prevail," one source said.